Certara(US:CERT)2024-05-08 07:56Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $96.7 million, representing a year-over-year growth of 7% on a reported basis and 6% on a constant currency basis [3][77] - Adjusted EBITDA for Q1 2024 was $29.1 million, with an adjusted EBITDA margin of 30% [59][121] - Net loss for Q1 2024 was $4.7 million compared to net income of $1.4 million in Q1 2023 [79] - Adjusted diluted earnings per share for Q1 2024 was $0.10 compared to $0.12 in the prior year [59] Business Line Data and Key Metrics Changes - Software revenue was $39.3 million in Q1 2024, reflecting a 19% increase year-over-year on a reported basis and 18% on a constant currency basis [55][77] - Services revenue was $57.3 million in Q1 2024, flat compared to the prior year [76][78] - Software bookings for Q1 2024 were $33.1 million, an increase of 8% from the prior year [57] - Technology-driven services bookings for Q1 2024 were $72.7 million, down 11% year-over-year [78] Market Data and Key Metrics Changes - The software net retention rate for Q1 2024 was 114%, consistent with the long-term growth profile [12] - Trailing 12-month software bookings were $139.5 million, up 11% year-over-year [12] - The services business is recovering following cautious customer spending in 2023, with stable customer activity reported [76] Company Strategy and Development Direction - The company launched Certara Cloud, a platform integrating access to its software suite, which is currently used by 15 of the top 30 biopharmaceutical companies [4] - The focus remains on expanding the commercial footprint and enhancing biosimulation capabilities while improving product usability [5][75] - Investments are being made in sales and marketing, as well as R&D, to drive growth and enhance software offerings [28][58] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the recovery of end markets throughout 2024, although funding has not yet translated into bookings and sales [9][46] - The company anticipates a stronger second half of 2024, with expectations for revenue growth of 9% to 13% compared to 2023 [14][38] - Management noted that the guidance does not include any benefits from the biotech funding environment, which could potentially enhance performance [48][104] Other Important Information - The company ended Q1 2024 with $224.8 million in cash and cash equivalents and $287.8 million in outstanding borrowings [14] - G&A expenses increased to $23 million from $19.8 million in Q1 2023, primarily due to changes related to the acquisition of Vyasa [13] Q&A Session Summary Question: Insights on services bookings and trends - Management noted that software bookings were impacted by timing, with some large deals moving to April, but they remain confident in the outlook [21][23] Question: Contribution from inorganic bookings - Inorganic bookings were around 2% of total bookings, with expectations for acceleration as the year progresses [24][25] Question: Margin progression and cost increases - Management indicated that increased costs were investments in sales and R&D, and they expect margin improvement as revenue grows in the second half of the year [28][44] Question: Visibility on services revenue growth - Management stated that while stability is observed, an inflection point in services bookings has not yet been reached, with expectations for improvement in the second half of the year [90][110] Question: Impact of biotech funding on bookings - Management clarified that while they are optimistic about the funding environment, it has not yet translated into bookings, with expectations for potential benefits in the latter half of the year [46][110]